Buyside firms are expected to spend about 15% less on external research in two years than they do now, as they rely more heavily on in-house-generated reports, TABB Group reports. According to TABB, buyside firms will spend $6.03 billion on outside research by the end of 2008, down from $7.09 billion this year, as spending for broker-generated research is expected to rise from $7.68 billion to $7.91 billion. Jeromee Johnson, the TABB analyst who wrote the report, says industry scandal and increased regulatory scrutiny have forced investment banks to cut back on analysts and the amount banks pay them, and increase the focus of their research coverage. In other results, TABB found that only 18% of large U.S. buy-side firms are working on unbundling, and the percentage of firms using bundled research will drop from 19% this year to 11% in 2008.
